(CNSNews.com) – House Speaker Nancy Pelosi (D-Calif.) announced on Wednesday afternoon that President Barack Obama is shelving a controversial proposal that would have forced the private health insurance of veterans to pay for their war- and service-related injuries.

“President Obama listened to the genuine concerns expressed by the veteran service organizations regarding the option of billing service-connected injuries to veterans’ insurance companies,” said Pelosi. “Based on the respect President Obama has for veterans and the principle concerns of our veteran leaders, the president made the decision that combat wounds should not be billed through their insurance policies.”

Pelosi made her comments at a meeting with veterans’ service organizations at the Capitol in Washington, D.C. After her announcement, the group gave her a standing ovation.

The proposal, which was discussed in recent hearings of the Veterans Affairs committees in the House and Senate and in the House Budget Committee, would have shifted more of the cost for service-related injuries from the government–through the Department of Veterans Affairs (VA)–to the private, third-party insurance plans held by many veterans.

Currently, the VA covers the full cost of medical ailments related to military service and bills third-party insurers only for non-service related ailments.

For example, if an injured veteran is treated for the flu, the veteran’s personal insurance is billed. If the injured veteran is treated for a service-related injury and requires hearing aids or prosthetics, for example, the VA covers the cost. The proposal Obama has decided to abandon would have shifted the expense of treating service-related injuries and illnesses from the VA to private insurance companies.

Last week, Veterans Affairs Secretary Eric Shinseki confirmed to the House and Senate committees on veterans’ affairs that the idea to bill veterans’ private individual insurance was being considered by the administration but was not yet a formal proposal.

“It is a consideration. It is not in the budget, but it is a consideration, and I’ll be sure that your concerns are delivered,” Shinseki told the House Veterans’ Affairs Committee. “And again, we’re talking–in health care–the two aspects of this are delivery of health care and the financing of it. This is about the financing. I want to assure you that there should be no concern about the delivery.”

But the idea had already generated strong opposition from veterans’ groups and members of Congress, and the veterans’ service organizations were making their concerns known to the White House.

Also last week, Sen. Patty Murray (D-Wash.), a member of the Senate Veterans Affairs Committee, said, “I believe that veterans with service-connected injuries have already paid by putting their lives on the line for our safety. When our troops are injured while serving this country, we should take care of those injuries completely. We shouldn’t nickel and dime them with their care.”

House Veterans Affairs Committee Rep. Michael Michaud (D-Me.) told Veterans Affairs Secretary Eric Shinseki during the Mar. 10 hearing, “If that [third-party payment proposal] is in the budget, I will not be supporting the budget. It is unconscionable and is an insult to our veterans who’ve been hurt overseas. So hopefully, you will give that message to OMB as it relates to third-party collections for disabled veterans, which is just unbelievable that anyone would ever think of doing that in this budget.”

Sen. Richard Burr (R-N.C.), the ranking member of the Senate Veterans Affairs Committee, also expressed opposition. “If this proposal reaches the Senate, I will strongly oppose it,” Burr told CNSNews.com in a statement Monday.

“The VA was created for the purpose of caring for those who have fought and sacrificed for our country, and the care for injuries sustained while serving is our responsibility.”